Escrow Services in Malta

We can assist companies by acting as escrow agent in the context of commercial transactions, including transfers of securities, intellectual property, internet domains and financing transactions. Our solutions guarantee highly customised escrow services in the context of safe-keeping of assets or for business transactions requiring an escrow mechanism.

Escrow Services in Malta – Key Facts

Escrow services in Malta provide an added layer of protection in commercial transactions by appointing an independent third party to hold and release funds or assets once agreed conditions are satisfied.

• Service area: Escrow Services in Malta
• Jurisdiction: Malta
• Escrow agent role: Independent third party appointed by the transacting parties to hold and regulate payment of funds or assets
• Purpose of escrow: To mitigate commercial risk and provide security for parties involved in a transaction
• Escrow account: A financial arrangement where funds are held by an entrusted third party until the agreed terms are met
• Escrow agreement: The document setting out the context, terms, mechanisms, responsibilities and duties governing the escrow arrangement
• Release condition: Funds are released only once confirmation is given that the agreed transaction terms have been fulfilled
• Conditions precedent: The escrow agent may help ensure that required conditions are satisfied before payment is released
• Due diligence: Funds are typically transferred after the escrow agent confirms that applicable due diligence checks have been completed in line with its policies and procedures
• Common use cases: High-value transactions, transactions with multiple obligations, cross-border deals and transactions requiring secure release of payment
• Commercial transactions: Escrow may be used for transfers of securities, intellectual property, internet domains, financing transactions, share transfers and asset transfers
• Asset safekeeping: Escrow arrangements may support the holding, administration and safekeeping of financial and non-financial assets
• Technical verification: In certain transactions, independent experts may be appointed to verify that goods, services or technical conditions have been satisfied
• Credibility factor: Credibility and reliability are key considerations when selecting an escrow agent
• Licensed trustee context: A licensed trustee company may act as escrow agent, security trustee or fiduciary holder of shares
• Regulated entity: CSB Trustees & Fiduciaries Limited is regulated by the Malta Financial Services Authority
• CSB Group support: Acting as escrow agent, drafting and implementing escrow arrangements, safe-keeping assets, holding documents, supporting secure payments and assisting with customised escrow mechanisms for local and international transactions

What is an escrow account?

An escrow account is a financial arrangement whereby a licensed third party, which is elected by the transacting parties as an entrusted independent third party, assumes the role of an escrow agent. The escrow agent holds and regulates payment of the funds required for contractual parties involved in a specific transaction.

Why should one opt to appoint an escrow agent in a business transaction?

An escrow agent may serve as an added level of protection within a business transaction, which level of protection is set to mitigate the commercial risks for all parties to a transaction. Mitigation of risk is achieved by the escrow agent ensuring that conditions precedent to a transaction are fulfilled by all parties to the said transaction. Such assurance shall be provided prior to a secure escrow payment used to exchange of funds and goods and/or services.

Furthermore, the independent third party (the escrow agency) provides an extra level of security for all parties by receiving and retaining the funds relating to the transaction in an escrow account, which funds are only released once a confirmation is given that all terms to an agreement are met. The escrow agent may itself be the party verifying that all conditions have been met, alternatively, in certain industry-specific transactions, whereby completion is subject to confirmations from technical experts within the field in question, the parties may elect independent experts (such as engineers) to verify the order/service (subject to the transaction) and its conditions as may be applicable within the context of the transaction

When should one opt for an escrow account?

It is safe to state that escrows are most commonly sought for in transactions of substantial value, and/or in cases where a number of obligations need to be fulfilled before the secure release of payment. The added level of security which an escrow service provides is deemed invaluable to parties who are desirous to transact with other business partners having different practices or cultural backgrounds to theirs.

How is an escrow account set up?

An escrow account is set up by virtue of an escrow agreement. The escrow agreement sets out the key features and terms for the operation of an escrow account. Primarily, an escrow agreement shall highlight and set out the context for which an escrow is being set-up, that is, why the parties in question are requesting the utilization of an escrow account. This context shall be backed up by the mechanisms of the escrow account. The mechanisms of an escrow account specify the exact manner how the account shall operate. This gives the parameters to all parties to a transaction. Furthermore, the escrow agreement shall highlight the responsibilities and duties of each and every party.

When does the transferor transfer funds to the escrow agent?

This is heavily dependent on the terms agreed upon between the parties which may vary from one transaction to another. Having said all this, the transfer of funds to the escrow agent shall occur prior to the delivery of the services/goods, and after confirmation by the escrow agency that the necessary and applicable due diligence confirmations and checks on the transferor have been conducted and are in line with the policies and procedures of the escrow agent.

What gives credibility to the escrow agent?

Given the responsibility and the crucial part that the escrow agent will be playing within a transaction, credibility and reliability are the two main characteristics that parties to a transaction look out for when electing an escrow agent. This credibility and reliability may be further supported by virtue of a licence issued in favour of the party providing the service of an escrow agent. While no specific licence regulates the escrow agents as such, and this specific service, one can note that following the integration and introduction of trusts into Malta’s legal system, several security related solutions in both commercial and non-commercial contexts are now available to suit clients’ specific requirements within their business.

By virtue of a trustee licence, a licensed entity, may be entrusted to:

• act as a security trustee for the holding, administration and safe-keeping of documents and financial and non-financial assets;
• act as escrow agent in the context of various commercial transactions; and
• hold of shares on a fiduciary basis

Our Escrow Services

CSB Trustees & Fiduciaries Limited, as a licensed Trustee company, forming part of CSB Group, and regulated by the Malta Financial Services Authority, provides escrow services, by acting as the independent third party in such transactions.

Whether an escrow transaction is taking place in Malta, Spain, Germany, UK or anywhere in the world, we can assist companies by acting as escrow agent in the context of commercial transactions, including transfers of securities, intellectual property, internet domains and financing transactions, and provides highly customised escrow services in the context of safe-keeping of assets or for business transactions requiring an escrow mechanism. These arrangements would typically arise in the context of share and asset transfers, finance deals, highly-valuable collectibles, and intellectual property.